An operating lease's primary characteristics are:
A) fully amortized, lessee maintains equipment and there is no cancellation clause.
B) not fully amortized, lessor maintains equipment and there is a cancellation clause.
C) fully amortized, lessor maintains equipment and there is a cancellation clause.
D) not fully amortized, lessor maintains equipment and there is not cancellation clause.
E) fully amortized, lessee maintains equipment and lessee can acquire assets at end of lease for fair market valuE.

Question

Quizplus · Accepted Answer

An operating lease is not fully amortized, meaning that the lessee does not take full ownership of the asset at the end of the lease term. The lessor maintains the equipment, and there is typically a cancellation clause that allows either party to terminate the lease early. Therefore, the characteristics described in option B align with an operating lease.

An Operating Lease's Primary Characteristics Are